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TORONTO—Canada has lost an appeal at the World Trade Organization over Ontario’s green energy laws.

Japan and the European Union brought the case three years ago, arguing that a part of the province’s green energy program requiring made-in-Ontario parts for wind and solar farms breaches international trade law.

They argued the incentives were illegal because they discriminated against foreign firms, a complaint that was upheld by a WTO adjudication panel in December 2012.

The federal and Ontario governments say they’re reviewing the decision to see what it means.

Ontario Energy Minister Bob Chiarelli says there are no plans to change the provincial legislation yet.

“We are awaiting to determine the specific outcomes of that particular hearing and we will work with the federal government in our response,” he said.

The feed-in-tariff system—established in 2009—requires participating electricity generators in Ontario to source up to 60 per cent of their equipment in the province if they want to be eligible for subsidies.

“As this is the first time Canada has received a WTO panel ruling arising solely from provincial policy or legislation, we will work with the Ontario government in order to respond to the decision,” said Caitlin Workman, a spokeswoman for the Department of Foreign Affairs and International Trade Canada.

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